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Financial openness and economic policy

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  • Antonin Rusek

Abstract

Economic policy works via two interrelated areas: changes in supply-demand balances and changes in relative prices. Effectiveness of economic policies then depends on the environment in which a given economy operates. The analysis shows that traditional economic policies of fostering growth via public sector investments crucially depend on the private capital account being closed (practically, on the capital mobility being low). An open capital account requires a different set of policies, aimed at facilitating the functioning of private markets and an increase of domestic private savings. This shift in the policy and growth paradigm constitutes the biggest challenge to the global economic community in the beginning of the 21st century. Copyright International Atlantic Economic Society 1998

Suggested Citation

  • Antonin Rusek, 1998. "Financial openness and economic policy," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 4(3), pages 207-217, August.
    • Handle: RePEc:kap:iaecre:v:4:y:1998:i:3:p:207-217:10.1007/bf02294890
    DOI: 10.1007/BF02294890
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    References listed on IDEAS

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    1. Harrison, Ann, 1996. "Openness and growth: A time-series, cross-country analysis for developing countries," Journal of Development Economics, Elsevier, vol. 48(2), pages 419-447, March.
    2. Buzaglo, Jorge, 1991. "Structural change and openness: Strategic alternatives in the Argentine economy," Journal of Policy Modeling, Elsevier, vol. 13(3), pages 407-416.
    3. Edwards, Sebastian, 1993. "Openness, Trade Liberalization, and Growth in Developing Countries," Journal of Economic Literature, American Economic Association, vol. 31(3), pages 1358-1393, September.
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